The thesis is concentrating on the development of tax neutrality in the area of direct taxation
of portfolio income within the EC Law. The question is of great importance as the juridical
powers of the EU are unclear and as the international tax law is a complexed area, it
does affect portfolios. The problem is often described in terms of double taxation and it is
of special interest for this paper to see how a portfolio is affected by cross-border investments
with relation to the European Union.
The term portfolio income is on the international area widely used and not all countries are
using a special taxation of portfolio income. The EU has no positive integration to build a
tax legislative platform and thereby to decide how portfolio income should be taxed. Instead
has the ECJ an exclusive possibility to destroy tax treatments which are unfair due to
the fundamental free movement of capital in the ECT.
Problems in regard to the lack of positive integration for the EU makes it harder to unify
the union into one tax system. Countries are afraid of loosing their important source of financing
the state and the two generally used methods of CIN and CEN are used in different
countries, even outside the union. To use them synchronised seems today to be a
utopy.
iii
To relieve the double taxation, are often bilateral methods used, and sometimes unilateral
methods. Both of them are using the Credit method, Exemption method and Deduction
method. The ECJ has in its case law favoured the Credit method, which seems to be the
same method used by the Directives, such as the Savings Tax Directive about information
exchange and in accordance with the doctrine.
The problems in the area are difficult as an uncertainty appears for the investments which
could interfere the global trade and a tax planning, if not even tax abuse could appear making
a movement which would have severe consequences for one of the biggest economical
engines in the world; the stockmarket. The G20 meeting has with its ‘Declaration summit on
financial markets and the world economy’ from the 15th November 2008 decided among other
things, to continue the work within organisations such as the OECD decided to, among
other things, strengthen the exchange of information on taxes on a middle-long time
schedule and to give severe consequences if this will be nonchalanced. This decision shows
how the importance of taxes on a practical view of the importance of developing a good
tax system to get into an economical global wealth.
iv